Ending Joint Ownership of a House: A (Real) Mess of Pottage.

I was recently instructed (at very short notice) in a case where two brothers (“A” and “B”), neither of who spoke English very well, were in dispute about their respective shares in a house they owned.

The Facts

The brief facts were that the property had been purchased in the early 1990’s in joint names for £63,000 subject to a mortgage (also in joint names) for £57,000. A few years later a £20,000 loan (“the Loan”) was taken out, again in joint names, and secured against the property. The two brothers and their families lived in the house together for another ten years with A paying both the mortgage and the Loan repayments, with virtually no assistance from B, until B moved out. Five years later B served a notice to sever the joint ownership of the property and subsequently issued a claim for the sale of the house and for the proceeds to be split 50/50 between the brothers. As a matter of law there is a presumption that, unless otherwise agreed (and evidenced), jointly owned property will usually be owned equally by the parties.

The Parties’ Cases

A’s defence, initially, was that the property was jointly owned but that the shares should reflect the fact that B had contributed virtually nothing over nearly 20 years. About a year later (before the matter came to trial, but after A had submitted an initial witness statement setting out his case in detail) A found a document, written in English and signed by B, confirming the Loan had been taken out to pay B’s debts (incurred, A said, when B had been arrested for smuggling phones in India) and that, in return for using the house as security for the Loan, B had given his share of the property to A and was merely a tenant from that point.

A also stated, despite the original purchase documents and the joint mortgage, that he believed he had purchased the property in his sole name and that he had been furious (but had done nothing) when, shortly after the purchase, he found out the property and the mortgage were in joint names.

B submitted witness statements denying being arrested in India or signing the document, but nine months later (the matter had still not come to trial) admitted in further witness statements that he had been arrested but said that he did not have significant debts on his return to the UK, and that he had signed the document so A could take out the Loan but had not understood the meaning of the document.

The Trial

At trial both brothers required the assistance of interpreters when they gave evidence (although it appeared both had over the previous three years been able to discuss matters with their respective legal advisors without needing interpreters – both sides had fallen out with their original solicitors and by now had new representation) and each indicated that the various errors in their original/earlier statements had been the fault of their original solicitors and that they had not read or understood what they were signing.

The Judge was therefore faced with evidence from two very unsatisfactory witnesses – one who apparently had forgotten that he had bought out his brother’s share of the property and that he had a signed agreement confirming that fact, and the other who had lied about being arrested and imprisoned and could not produce any evidence of having made any significant payments to either the mortgage or the Loan.

Civil Procedure Rules

None of the nine witness statements provided by two brothers complied with Civil Procedure Rule (CPR) 22 and Practice Direction 22.3A which requires that where a person is unable to read or sign a document to be verified by a statement of truth (including a Claim, a Defence or a Witness Statement) an “authorised person”, i.e. a person able to administer oaths and take affidavits, must certify the document in the following terms (from Annex 1 at CPR PD 22.6):

“I certify that I [name and address of authorised person] have read over the contents of this document and the declaration of truth to the person signing the document [if there are exhibits, add “and explained the nature and effect of the exhibits referred to in it”] who appeared to understand (a) the document and approved its content as accurate and (b) the declaration of truth and the consequences of making a false declaration, and made his mark in my presence.”

A document which has not been verified by a signed Statement of Truth and including a Certificate in the above terms, if required, remains effective although, in the case of a witness statement, it cannot be relied upon in evidence, and may be struck out either on application by a party or by the Court of its own motion (CPR 22.2).

The Decision

In this case the Judge decided not to strike out all the statements from both sides but indicated that given the contradictions and errors in both parties’ accounts at different stages (as set out in their various statements) he felt unable to place any reliance on either parties’ live evidence and was damning of the conduct of both parties as regards the documentation presented to the Court. However, considering all matters and by the narrowest of margins the Judge preferred B’s version of events.

In any event the Judge found that, even if he had not preferred B’s account, the document relied upon by A was not a valid disposal of B’s interest in land because it did not comply with the requirements of section 53(1) of the Law of Property Act 1925, i.e. such a document needs to effect the transfer of the interest whereas the document signed by B, at its highest, recorded an earlier agreement to transfer B’s interest when the Loan was taken out and/or purported to confirm that the interest had thereafter been transferred.

The end result was that having met the vast majority of the payments under both the mortgage and the Loan for over twenty years, A lost half of “his” house and was required to pay B’s costs as well as his own (with the costs totalling something in the region of £100,000).

Conclusion

The book of Genesis (ch25 v29) tells the story of Jacob and Esau where Jacob cheats his brother out of his inheritance for a bowl of lentil stew (a “mess of pottage”); in this case the Judge found that A had tried to cheat his brother out of his share of the house by getting him to sign a document he could not read.

Alternatively, if A was telling the truth, he lost his house because he failed to understand or appreciate the significance of a number of important documents.

If you are buying a house, buying out a joint owner or preparing documents for court, it is essential that you get professional advice before you sign (or get someone else to sign) any documents. Legal advice can be obtained from solicitors, the Citizens Advice Bureau or from a barrister (including barristers from Becket Chambers in Canterbury, Eastbourne, Dartford, Maidstone or Tunbridge Wells) under the “Direct Public Access” scheme.